The Federal Government and the Central Bank of Nigeria (CBN) have signed a Memorandum of Understanding (MoU) to strengthen coordination between fiscal and monetary authorities.
The agreement was signed by the Federal Ministry of Finance and the CBN in Abuja on Friday.
The MoU establishes a framework for regular consultations, information sharing and joint policy assessments aimed at improving macroeconomic management and policy consistency.
Olayemi Cardoso, governor of the CBN, said the agreement would formalise the existing collaboration between the two institutions.
He said fiscal and monetary policies are closely connected, with government spending, taxation and borrowing decisions affecting liquidity, interest rates and financial conditions.
“What distinguishes today’s event is the formal institutionalisation of that collaboration,” Cardoso said.
Under the agreement, both institutions will strengthen cooperation in government cash management, debt issuance planning, liquidity forecasting, macroeconomic analysis and periodic policy consultations.
Cardoso said the framework would create more predictable channels for engagement and improve economic decision-making.
“It transforms a relationship built on practice into one anchored by clear processes and enduring institutional commitment,” he said.
The CBN governor said the agreement was timely as the apex bank continues its transition towards an inflation-targeting framework.
He said the effectiveness of inflation targeting would depend not only on monetary policy but also on a supportive fiscal environment.
FG, CBN to Coordinate On Borrowing, Liquidity
Taiwo Oyedele, finance minister and coordinating minister of the economy, said the MoU recognises the need for coordination while maintaining the distinct mandates of both institutions.
“Good economic management requires independence of institutions but independence must not mean isolation,” Oyedele said.
He said government borrowing affects liquidity, interest rates and financing costs, while monetary policy also influences the cost of government financing.
“Tariffs and exchange rate affect prices and revenues. Spendings affect demands. Our mandates are distinct but our outcomes are interconnected,” he said.
Oyedele said the MoU formalises existing coordination mechanisms, including those involving the Economic Management Team and the National Economic Council.
The agreement also provides for closer cooperation on government cash management, debt issuance and liquidity forecasting.
The development comes as the Federal Government continues to implement economic reforms while the CBN adjusts its monetary policy framework.
The International Monetary Fund (IMF) recently called on Nigeria and other major African economies to strengthen fiscal, monetary and financial-sector reforms to improve macroeconomic stability.
Nigeria is also implementing tax reforms aimed at simplifying the tax system, improving compliance and expanding government revenue.
The reforms, which took effect in January 2026, established new frameworks through the Nigeria Tax Act, Nigeria Tax Administration Act, Nigeria Revenue Service (Establishment) Act and Joint Revenue Board (Establishment) Act.
The CBN, meanwhile, has moved towards gradual monetary policy easing after a period of aggressive tightening.
The Monetary Policy Rate stood at 18.75 per cent in 2023 before it was raised to 22.75 per cent in February 2024 and subsequently to 27.5 per cent by the end of the year.
The apex bank also increased banks’ Cash Reserve Ratio from 32.5 per cent to 45 per cent in early 2024 and later to 50 per cent to manage liquidity.
The latest agreement is expected to provide a formal framework for fiscal and monetary authorities to coordinate their actions while retaining their separate statutory responsibilities.
